Extra Loan Payment Calculator
See how additional principal payments change your payoff.
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Example inputs are filled in. Replace them with your own amounts.
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How this calculator works
Each month: interest = opening balance × annual interest rate ÷ 12; principal paid = payment − interest. Compare the regular payment with regular + extra. The last payment is capped at the amount owed. Fixed interest and month-end payments are assumed; fees, escrow, daily interest, variable rates and prepayment penalties are excluded. Use the loan interest rate rather than an APR that includes fees. Confirm how your lender applies additional payments. Limit: 1,200 months.
Reference: CFPB: prepayment penalties.
Source review: October 2, 2026. Planning estimate; individual terms and rules may differ.
How extra payments shorten a loan
Each monthly payment on an amortizing loan covers that month's interest first, and the rest reduces the balance. An extra payment goes entirely to the balance, so next month's interest is a little smaller and more of the regular payment reaches principal. That compounding effect is why modest extra payments can cut years off a loan.
Worked example: a $20,000 loan at 7%
The example inputs are a $20,000 balance at 7% APR with a $400 monthly payment. Without extra payments it takes 60 months and $3,715 of interest. Here is what different extra amounts do:
| Extra per month | Total payment | Payoff time | Total interest | Time saved | Interest saved |
|---|---|---|---|---|---|
| $0 | $400 | 60 months | $3,715 | - | - |
| $50 | $450 | 52 months | $3,219 | 8 months | $497 |
| $100 | $500 | 46 months | $2,841 | 14 months | $874 |
| $200 | $600 | 38 months | $2,305 | 22 months | $1,410 |
| $400 | $800 | 28 months | $1,681 | 32 months | $2,034 |
An extra $100 a month saves $874 of interest and pays the loan off 14 months sooner. The first extra dollars save the most per dollar; after that, the return per extra dollar falls, but the payoff date keeps moving forward.
Make sure the extra goes to principal
Some lenders apply extra money to the next scheduled payment instead of the balance, which saves no interest. When you pay extra, choose the principal-only option in the online portal or write principal-only on the payment, then check the next statement to confirm the balance fell by the extra amount. Read your loan agreement for prepayment penalties. They are uncommon on most mortgages and student loans today, but some personal and auto loans still have them, and loans that use precomputed interest save less from paying early.
Pay extra or invest?
Paying down a loan earns a guaranteed return equal to its interest rate. Use that to compare:
- Above about 8%: credit cards and many personal loans. Paying them off first usually beats investing.
- Around 4% to 8%: many auto loans and mortgages. A reasonable middle ground is to get any employer retirement match first, keep an emergency fund, then split extra money between investing and the loan.
- Below about 4%: older low-rate mortgages. Investing has historically earned more over long periods, although with more risk.
Never send extra money to a loan before you have some emergency savings; a paid-down car loan cannot pay for a surprise bill, and you may end up borrowing again at a higher rate.
The biweekly payment approach
Paying half the monthly payment every two weeks creates 26 half-payments, or 13 full payments a year instead of 12. On the example loan that is like adding about $33 a month. It works best when your paycheck is biweekly, but only if the lender applies each half-payment when received; some hold it until the full payment arrives. Many lenders and third-party services charge fees for biweekly plans, and you can get the same result for free by adding one-twelfth of a payment each month.
Mortgages, student loans and auto loans
- Mortgages: paying down principal also builds equity faster. On a conventional loan, private mortgage insurance can be removed at your request once the balance reaches 80% of the original home value and ends automatically at 78% if payments are current. See what PMI is and how to avoid it.
- Student loans: extra payments typically cover accrued interest first. If you are working toward Public Service Loan Forgiveness or an income-driven plan, extra payments may reduce the amount forgiven rather than save you money.
- Auto loans: because cars lose value quickly, paying ahead helps you avoid owing more than the car is worth if you need to sell.
Finding the money for extra payments
The easiest extra payment comes from money you do not miss: the third paycheck in a biweekly month, part of a tax refund or bonus, or a raise sent straight to the loan before it reaches your spending account. Rounding a $376 payment up to $400 is another painless habit. The paycheck budget calculator shows how much room your budget has.
How the first payments are split
On the example $20,000 loan at 7% with a $400 payment, early payments are heavy on interest. Each month's interest is the balance times 7% / 12:
| Month | Payment | Interest | Principal | Balance after |
|---|---|---|---|---|
| 1 | $400.00 | $116.67 | $283.33 | $19,716.67 |
| 2 | $400.00 | $115.01 | $284.99 | $19,431.68 |
| 3 | $400.00 | $113.35 | $286.65 | $19,145.03 |
| 6 | $400.00 | $108.31 | $291.69 | $18,275.01 |
| 12 | $400.00 | $97.95 | $302.05 | $16,488.77 |
Because interest is charged on the remaining balance, every extra dollar of principal you pay now removes interest from every later month.
Example: extra payments on a 30-year mortgage
A $300,000 mortgage at 6.5% for 30 years has a principal and interest payment of $1,896.20 and costs about $382,633 in interest over the full term. Adding a fixed amount every month changes that dramatically:
| Extra per month | Paid off in | Total interest | Interest saved |
|---|---|---|---|
| $0 | 30 years | $382,633 | - |
| $100 | 26 years | $321,639 | $60,995 |
| $200 | 23 years 1 month | $279,185 | $103,449 |
| $500 | 17 years 6 months | $202,874 | $179,759 |
Run your own loan in the calculator above by entering the balance, rate and current payment. For mortgages, our mortgage payment calculator includes taxes and insurance.
Which loan to prepay first
If you have several loans, extra money saves the most interest on the one with the highest rate, the same logic as the debt avalanche. A credit card at 24% should come before a car loan at 6%, which should come before a mortgage at 4%. Two exceptions: a loan with a small balance you can clear in a few months frees up its whole payment for your budget, and federal student loans in a forgiveness program may not benefit from prepayment at all. The debt snowball vs. avalanche calculator compares the order across several debts.
Tax effects of paying loans early
Some loan interest lowers your taxes, which slightly reduces the benefit of paying it off early. Mortgage interest is deductible only if you itemize deductions, and with the 2026 standard deduction of $16,100 for single filers and $32,200 for joint filers, most households do not itemize, so they get no tax benefit from mortgage interest. Up to $2,500 of student loan interest a year can be deducted without itemizing if your income is below the phase-out range. Interest on car loans, personal loans and credit cards is generally not deductible for personal use, although new rules for 2025 through 2028 allow a deduction for interest on some loans for new vehicles assembled in the United States.
Key loan terms
- Principal: the amount you still owe, not counting interest.
- APR: the yearly cost of borrowing as a percentage; monthly interest is roughly balance times APR / 12.
- Amortization: the schedule that splits each payment between interest and principal until the balance reaches zero.
- Prepayment penalty: a fee some loans charge for paying off early; check your loan agreement.
- Recast: a mortgage option that lowers the monthly payment after a large principal payment, usually for a fee.
Example: a $5,000 lump sum
Windfalls work the same way as monthly extras, only faster. On the example $20,000 loan at 7% with $400 payments, putting a $5,000 tax refund or bonus toward principal on day one cuts the payoff from 60 months to 43 and total interest from $3,715 to $1,977, a saving of about $1,738. The same $5,000 paid after the first year still saves about $1,304 and finishes the loan in 44 months. The earlier the prepayment, the more interest it removes, so if you are going to prepay, sooner beats later.
Before you send a lump sum, check that your emergency fund is in place and that no higher-rate debt is waiting, since that is where the same dollars would save the most.
Refinancing vs. paying extra
Refinancing replaces a loan with a new one at a different rate or term. It can save more than extra payments when rates have fallen well below your current rate, but closing costs, which on mortgages often run 2% to 5% of the loan, take time to recover. Our refinance break-even calculator shows how many months that takes. Extra payments cost nothing to start or stop, so they are the flexible choice when a refinance does not clearly pay off, and the two can be combined.
Frequently asked questions
How much does an extra $100 a month save?
On a $20,000 loan at 7% with a $400 payment, about $874 of interest and 14 months. Savings are larger on bigger or higher-rate loans.
Is it better to pay extra monthly or one lump sum?
Earlier is better. A lump sum paid now saves more interest than the same amount spread over the year, but regular monthly extras are easier to keep up.
Do extra payments lower my monthly payment?
Usually not. Most loans keep the same payment and finish sooner. Some mortgages allow a recast that lowers the payment after a large prepayment, often for a fee.
Should I pay off debt or build savings first?
Build a starter emergency fund first, capture any employer 401(k) match, then put extra money toward the highest-rate debt.
Can I pay extra on my car loan?
Usually yes. Ask the lender to apply extra money to principal and check the contract for prepayment penalties or precomputed interest, which reduce the savings.
Is it better to make one extra payment a year or add to each payment?
Adding a little to each payment saves slightly more interest because the principal falls sooner, but both work. Choose whichever fits your cash flow.
Will paying off a loan early hurt my credit?
Closing an installment loan can cause a small temporary dip, but lower debt and a record of on-time payments help your credit over time.
Does an extra payment change my due date?
Usually not. Most lenders still expect the regular payment next month unless they advance the due date; check how your lender handles it.